Hi, my name is Don!

January 23, 2007January 23, 2007

Debt consolidator

These days, it seems like I’m more of an accountant than I am a computer guy. Lately, I’ve been doing a lot of investing, savings and managing of funds. Now, I am helping some friends with their financial issues. I am consolidating their debts into one bill in order to help them get out of debt quicker. Maybe, I’m in the wrong field. I should have became a Certified General Accountant.

When I first started up Project One, I initially assumed that I would be doing programming. I didn’t think I would become the President, the CEO, Accountant, Marketing Director, Head of Public Relations, Project Manager, Graphics Designer and a Programmer all rolled up into one. It’s not an easy task to take but someone’s got to do it. It’s no wonder I don’t have any free time to myself. I’m going to have to hire someone to take over part of my job.

So far, every penny that Project One has earned is currently sitting our business bank account. I can’t touch that money and neither can the other guys. The only way to withdraw the money is to write ourselves cheques. We had our account set up so that it requires the signatures of two account holders. But at the moment, even with two signatures, we still can’t withdraw money because we have no cheques. The cheques aren’t going to be order until all of my business partners their lazy asses to the bank and sign some papers. The bank manager was threatening to close our accounts if the other guys don’t go in to sign the papers.

I have another cheque to deposit from a previous client. I could have asked them to write the cheque in my name but for tax purposes, it’s best to make it out to the company. Or else Revenue Canada will audit us. I don’t think the ban will accept this cheque since we don’t have an account to deposit it into.

Since I’ve got all this experience with money, I guess it makes sense if I’m the accountant. At least this way, I’ll gain more knowledge of how the financial system works and use it to my advantage. That’s what I’ve been doing since the beginning of college in order to help reduce my debts. If I had taken continued with the student loan program, I would be in more debt than I am now. I would have had to pay back five times more. It’s a good thing I’ve learned to manage my money at an early stage.

Now that I’ve got most of my finances in order, I’m helping out a couple friends who are in debt. They don’t quite understand how the credit card system works which is why they’re in this situation in the first place. If they’ve read the fine prints, they would have known the reason why they’re in debt. Most people will fall into the trap where they only pay the minimum balance. They don’t realize that the minimum balance only covers the interest. By the following month, the payment that they made will show up on the bill again.

My friend has been trying to pay off a $3,000 credits for the past year or so. She informed me that she has been making $100 payment every month but it doesn’t seem like the balance is dropping. I doubt that a $100 a month is sufficient to decrease a $3,000 credit bill. For a balance of $3,000, she’s likely to be charged $40 in interest. That means that only $60 goes towards the balance. By the following month, another $40 is charged for interest. So that means she’s only paying $20 a month. There’s a big different from paying $100 and pay $20.

Some credit card company will increase the interest rate if the balance isn’t paid in full by the end of the year. The time last I talked with her, she mentioned that she was paying 28.8% interest which is insane. Most credit cards charge 19.9% interest but the card that she had was a lot higher. Either she started out around 19.9% and it has been increase to 28.8% or she has some special credit card.

In order to assist her with problem, I’ve taken all of her debts and transfer the balance to my no interest credit card. The $100 payment that she’ll be making every month will actually go towards the balance this time. There won’t be any interest charged unless she fails to pay off the whole debt by the end of the year. I’ve worked out her monthly payments and I think she can have it all paid for by December.

In order to rid my friend of her debt, she needs to make more than $100 a month payments. If you do the math, $3,000 divided by twelve months equals to $250 a month. My friend can only afford to pay $100 month so the extra funds will be coming out of my pocket. She can reimburse me later after we’ve cleared off the $3,000.

Hopefully, by the time she has all of this paid for, she’ll think twice before charging her purchases on credit cards. She still has one credit card left but she won’t be able to use it because it’s currently maxed out. I told her to hang on to it in case of emergencies but it’s unlikely that she’ll need it for anything. Once I’m done helping her, I’ll be helping another friend with their financial issues.

That’s the down side of starting up a family when you’re not financially stable yet. I’m helping them out more because of the kids. I don’t want to see the family struggle because collectors are after them to make bill payments. My friend works part time but her husband works full time. The income that they bring in isn’t enough to support the family. The husband has too much pride to ask for financial assistants but they’ve tried. They’ve attempted to open up a line of credit but with their current credit standings, no bank will help them.

I am willing to help them because I’m not a bank, I’m a human being. I’m not weighing my decision on whether I’ll profit or not. I’m basing my decision of whether it will help the family or not. I really don’t care if I end up losing money by helping them. I’m already down $5,000 because of other people’s debts. The monthly credit card bills that I’m paying for now aren’t even mine. But I’ve learned a lesson from my past mistakes. I know who to lend money to and who not to lend money too so learn from my mistake. Make sure you know who you’re lending money to. If you’re going to lend money to someone, not sure that they are using it for necessity and not luxury.